Magdy Martínez-Solimán: First International Seminar – A World without Poverty

Nov 18, 2014

Session: Is a World without Poverty Possible?

Your Excellency, Madam Minister of Social Development of Brazil, Teresa Campello,
Dr. Kaushik Basu, Chief Economist of the World Bank, Dr. Sergei Soares, President of IPEA, Ladies and Gentlemen,

I am delighted to be with you today in this First International Seminar on “A World without Poverty”. I would like to thank our partners the World Bank, the Ministry of Social Development and Fight against Hunger of Brazil, and the Brazilian Institute of Applied Economic Research for co-organizing this event together with UNDP’s International Policy Centre for Inclusive Growth and with the support of RIO+ Centre. We are pleased to be part of the Brazil Learning Initiative for a World without Poverty.

My remarks today are structured around different dimensions of the question: “Is a world without poverty possible?”

A very short speech would start by saying: “Yes, it is possible. Take a look at Brazil from 1990 to 2014”. The audience probably deserves some more detail. As we all know, the world has reached the MDG target of halving the proportion of people living in extreme poverty (living on less than $1.25 in PPPs a day) five years ahead of the 2015 deadline.

A world without poverty is not only possible, but within reach.

However, these aggregate analyses can be deeply misleading. China, India, Brazil, Mexico and the prosperous rise of some African nations contrast with the rest of Southern Asia and sub-Saharan Africa, with close to half of its population still extreme poor.

China and other countries in East and South Asia have been the major driver in reducing the aggregate global poverty rate. But even in China, a low extreme poverty rate of 6.3 per cent still translates into more than 84 million people.[1] This is almost twice the population of Brazil’s largest state, São Paulo!

The heterogeneous rate in poverty reduction is not an original point, and may even seem trivial. But I want to emphasize it because to eradicate poverty it is not enough to just extrapolate global, aggregate trends. We need to understand why close to one billion people have been left out of the processes that brought many millions above the poverty line.

While there are multiple reasons, there are two that require our utmost attention: exclusion and vulnerability to shocks.

Many of those that still live in poverty today are part of marginalized groups that have seen their country’s progress pass them by, often in contexts of low social cohesion suffering from political and economic exclusion. To eradicate this kind of poverty we need to deal with what I call the challenge of reaching “the last mile” or the suggestion of “Getting Down to Zero” in a very Brazilian public policy expression that has become universal. This is a complex task, and I will come to it later in more detail. But it is important to note that the last mile exists both in remote rural areas, as well within cities – where the mile is figurative. In fact, by 2012, nearly 33 per cent of urban residents in developing regions still lived in slums with inadequate access to basic services, housing, security and livelihoods. Due, in part, to the fast pace of urbanization, the number of people living in slum conditions is growing.

People also remain poor, or are thrown back into poverty, because of conflicts, natural disasters, or some other shocks which families and communities are just unable to cope with. That is why we need a dynamic perspective on poverty. Shocks like conflict and disasters that overwhelm national capacities to respond can drive setbacks, even in countries that have made progress. We can think of the current Ebola outbreak in Guinea, Liberia, and Sierra Leone. I recently went to these three countries to help repurpose the UN Country Programmes, and have seen first-hand the devastating impact of this shock on people’s lives. Ebola will erase the gains of peace and development for a generation or more, if we don’t help.

We are currently witnessing multiple refugee crises due to the conflicts in CAR, DRC, Mali, Syria, and the border area between South Sudan and Sudan, among others. The number of newly displaced persons (both cross-border refugees and internally displaced persons) has tripled since 2010, reaching a record high of 51 million by the end of 2013. These crises create major obstacles for development and the fight against poverty. Again, I will elaborate more on this challenge, but I would like to note that it calls for a resilience approach to poverty reduction, or risk-informed development.

In the remainder of my remarks, I will ask two questions. First, what do we mean by a world without poverty? Second, how does development get us there

What do we mean when we say “a world without poverty?”

We need to go beyond income poverty alone when thinking about poverty.

Deprivation is more than just lack of income. The development agenda is not only about ensuring that basic needs are met. It is fundamentally about how to ensure that people’s aspirations are met.

As Mahbub ul Haq put it “the objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives." At UNDP, this human development approach underlies all our work.

People need decent jobs, greater access to information and knowledge, better health services, more secure livelihoods, security against crime and physical violence, political and cultural freedoms and opportunities to participate in community activities. Women need equality, minorities respect. The planet needs protection and the world demands peace.

All of these things are important in their own right. They are ends to be achieved. But they are also instrumental to achieve a world without income poverty – everywhere, and all the time.

This is the message that has emerged, loud and clear, from the global conversation on the post-2015 development agenda. The current proposal of the Open Working Group on Sustainable Development Goals (SDGs) is a reflection of the hopes, aspirations, and demands of people around the world, aiming not only to finish the job of the MDGs and move to eradicate poverty, but also to reduce inequalities, combat environmental degradation and climate change, and build inclusive and peaceful societies. By a “world without poverty,” we really mean meeting the development aspirations of people.

A world without poverty – broadly understood – is challenging but achievable. However, it requires a fundamentally new approach in the post-MDG era.

How should we approach poverty reduction and development in the post-MDG era?

Let me first reflect on the approach that dominated the MDG-era.

The foundation for much of the thinking and action on development cooperation over the last 15 years was dominated by the pursuit of the MDG-agenda, which resulted from the Millennium Declaration and the UN conferences of the preceding decade.

This agenda was based on a compact between developed and developing nations. Developing countries committed to a set of goals (MDGs 1-7) and to improving governance, while developed countries committed to making resources and opportunities available to enable developing countries to achieve those goals (MDG 8).

With their clear and simple call to tackle extreme poverty and hunger, advance health, gender equality, and women’s empowerment, the MDGs have helped to mobilize resources and concentrate action around the world.

Many developing countries integrated the MDGs in their development plans and poverty reduction strategy papers. And pursued very deliberate strategies to achieve these goals and mobilize external support around them.

The MDGs have also fostered increased knowledge and capacity and the strengthening of statistical systems at both national and international levels to enable the production of quality data for monitoring progress.

But the framing of the MDGs was informed by – and reinforced – the duality between developed and developing countries that dominated perceptions of development cooperation at the turn of the century, and for much time before then. It also saw development cooperation as a rather narrow “assistance-like” endeavor, similar to social transfers at the national level, where money flows from those better-off to those that are poor.

If we want to achieve a world without poverty by 2030, we need a new approach to development.

This new approach should be cognizant of three fundamental structural changes.

A multipolar world

We all know that, today, the duality between developed and developing countries is not neat. Emerging economies do not see themselves fitting in either group, and have sharp differences amongst each other.

South-South cooperation (concessional loans, grants, debt relief and technical cooperation) is estimated at 10 per cent of total development cooperation in 2011.[2]

Going forward this requires widening the donor base. We need global actors with global responsibilities, who can have seats at the development effectiveness table, not only as donors but also as partners.

But the role of the South goes beyond resources. Ideas and policies from the South are an essential contribution to development. Many developing countries, and even developed countries, would have a lot to gain from the recent experience in Brazil in reducing both poverty and inequality. The International Policy Center for Inclusive Growth has been playing a fundamental role in sharing this experience. With the support of the Government of Brazil, a distinctive feature of the IPC-IG has been that it takes an approach grounded by the experience, and needs, of developing countries. The RIO+ Centre for Sustainable Development based in Rio de Janeiro is another relevant example and has been set up as one of UNDP’s global policy centres to contribute with ideas and actions to advance the sustainable development agenda, particularly from the Global South perspective. Both, and of course IPEA, are the kind of institutions that are needed to take full advantage of the potential of the South as a source of ideas and policies for development.

A more demanding financing context

Ideas are key, but financing is important, too. And we can no longer think of development financing needs as a “gap” to be filled. There are growing pressures to have traditional “aid” more narrowly focused on either very poor or fragile countries.

At the same time, a larger set of issues beyond financing development cooperation is emerging. The need for international action and financing on issues ranging from climate change to communicable disease control to transnational crime and terrorism is clear.

Amidst this new reality there is an on-going debate around the definition of ODA. Some donors would like to widen the concept of ODA to include human rights, rule of law, judicial, military and security sector cooperation. We also witness a dialectic debate between having peaceful and inclusive societies in the SDGs (Goal 16 in the OWG proposal) and maintaining the normative definition of ODA. In this context, two things are important. First, to ensure that there is clarity on what is included in ODA. Second, to ensure that any changes in the definition of ODA that inflate current measures are accompanied by a proper upward adjustment to the 0.7 % of GNI target to which (traditional) donors committed.

What do we need to do, in practice, to get to a world without poverty where development aspirations are met?

In practice, there are three streams of action that are required:

Building Resilience is the first

The challenge of eradicating poverty is to eradicate it in countries where natural disasters, conflict, instability, weak governance and institutions, and little rule of law underpin it every day. The geography of fragility is a difficult terrain where to fight poverty.

At the same time, the challenge is not just to lift people out of poverty; it is to ensure that their escape and liberation is permanent.

We know that in the absence of social protection, people just above the poverty line face increased risks of falling below it, or those in poverty face being trapped in it for generations. Accordingly, comprehensive social protection programmes will remain key.

In this context, I would like to commend Brazil’s Bolsa Família programme, which is one of the most notable examples of how well-designed social protection programmes can be effective in reducing poverty, avoiding its inter-generational fatality, and addressing inequalities. Brazil’s experience also sheds light on the old debate between transfers and jobs in reducing poverty. Sometimes the two are presented as mutually exclusive alternatives, with transfers imposing costs on growth and jobs. Brazil was able to achieve a good balance between effective transfer mechanisms and expanding employment opportunities. This shows that there is not necessarily a trade-off between providing social protection and achieving jobs-rich growth – and that, actually, the two may be self-reinforcing, especially when transfers come along with better health and education outcomes, contributing to growth. In sum, stronger investments in resilience have a pay-off in more robust growth.

However, in many countries, development progress remains vulnerable to volatility and shocks, including economic shocks, conflict, natural disasters, and spread of communicable diseases.

The impacts of these shocks are even more severe when governance processes are not effective in delivering services to the poor and excluded (e.g. as experienced in the Ebola crisis). Ebola has been defined as the health crisis of poverty.

UNDP, building on its expertise through the partnership with the Global Fund to Fight HIV, TB and Malaria, is now at the forefront of supporting West African countries dealing with Ebola. We focus our support on (1) coordination and delivery of essential services, including support to the health and justice sectors (2) community engagement, including a focus on the needs of women, and (3) early recovery of the economy.

Building resilience is fundamental to sustaining human development. It is a transformative process with the potential to strengthen the capacity of people and their communities, countries, and institutions to anticipate, prevent, recover from, and transform in the aftermath of shocks, stresses, and change.

Following the end of the Khmer Rouge regime, Cambodia faced monumental challenges: millions of people displaced, infrastructure shattered, institutional capacities virtually destroyed. As Cambodia rebuilt, UNDP provided support focusing efforts among others on promoting reconciliation and building peace, participatory local development, and strengthening institutions from the national to the local. Cambodia is now considered one of the fastest growing economies, “unmatched by any other post-conflict society”, also with an annual average growth rate in Human Development Index (HDI) of about 1.7 percent.

Tackling Inequalities and Ensuring Inclusion

A world without poverty and deprivation also means addressing the hardest to reach groups – the last mile that I mentioned at the outset, the idea of getting to zero. The imperative of leaving no one behind, now and in the future, requires inequality to be addressed.

Overall the next global development agenda needs to address the significant problem of inequality which has stood in the way of reaching the MDG targets.

More than seventy five per cent of the population in developing countries lives in societies which are more unequal than they were two decades ago. The richest eight per cent of the world’s population earns half of the world’s total income, leaving the remaining 92 per cent of people to share the other half.

Growing or high income inequality is detrimental to economic growth, in particular to poverty-reducing growth. High levels of inequality also undermine social cohesion, increase political and social tension, and can result in instability and conflict. For this reason, tackling inequalities has both intrinsic value and important practical benefits.

As a recent UNDP report “Humanity Divided” stressed, inequality cannot be effectively confronted unless the inextricable links between inequality of outcomes and inequality of opportunities are taken into account.

Many factors such as cultural barriers, geographic isolation, lack of infrastructure, generations of underinvestment, biased institutions or legal systems, social norms or living in fragile or conflict-affected areas can prevent people to escape poverty and deprivation, and keep them trapped.

Ensuring Sustainability

Our recent Human Development Reports (2011 and 2013) examined the impact of different environmental scenarios on the Human Development Index (HDI) and the number of people living in extreme poverty.

Under a severe “environmental disaster” scenario, which envisions vast deforestation and land degradation, dramatic declines in biodiversity and accelerated extreme weather events, the global HDI value in 2050 would fall 15 per cent below that under the baseline scenario—22 per cent below in South Asia and 24 per cent below in Sub-Saharan Africa, effectively halting or even reversing decades of human development progress in both regions.

Some 2.7 billion more people would live in extreme poverty under the “environmental disaster” scenario. This is a consequence of two interrelated factors. First, environmental degradation would increase the number of people in extreme poverty by 1.9 billion. Second, environmental calamities would keep some 800 million poor people from rising out of extreme poverty, as they would otherwise have done under the base case scenario.

These simulations stress that consequences of environmental threats for poverty eradication and human development are very high. The longer action is delayed, the higher the cost will be.

Hence, addressing environmental degradation, including climate change, is critical for poverty reduction and for the promotion of inclusive and sustainable development.

Environmental degradation also exacerbates inequalities. Many of the world’s poor live in coastal zones susceptible to storms and rising sea levels, on farm lands which are increasingly vulnerable to drought, or on hillsides prone to landslides. They rely disproportionately on the goods and services provided by nature for their income, livelihoods, food, water, and fuel. This leaves them highly vulnerable to the effects of ecosystem degradation.

Women are particularly vulnerable, since their livelihoods are often directly dependent on the natural environment, for example, as primary water and fuel wood collectors. However, precisely these same societal roles that make women more vulnerable also make them key actors for driving environmental change.

In conclusion, we need tools to support countries to chart their developmental paths. We need finance to implement the required actions. And we need an accountability framework that tells us about progress and what more needs to be done and by whom.

First, on tools, given the broad formulation of the proposed SDGs, we will need to help developing countries with the challenge of meeting a large range of targets. Each country will have to develop a policy pathway, identifying the most appropriate sequence of interventions and investments, given its level of development, endowments, and aspirations.

Second, on financing, we need to consider the how the broader international public finance will also help mobilize private resources. Philanthropy and corporate social responsibility will only go so far, and the challenge will be to align incentives for profit-driven investment decisions with meeting the aspirations of the post-2015 agenda. This can be achieved through regulatory reforms that, for instance, place incentives on the protection of global public goods and put a price on global public “bads” such as pollution, including greenhouse gases. The 3rd International Conference on Financing for Development, scheduled for next July in Addis Ababa, can be a key moment in taking these issues forward.

Finally, an accountability framework that engages citizens and civil society. This was the spirit of the Rio Dialogues, further expanded with the MyWorld survey, whereby the voices of millions of people were heard as the post-2015 agenda was being formulated. These processes can now be reshaped to help the world to hold itself to account for the commitments it will make when the SDGs are adopted.

With these three elements, I believe that, truly, a world without poverty by 2030, can and will be achieved. Just like with the end of slavery, the economic benefit will not be the driving force. It will be the moral imperatives of dignity and solidarity, equality, sustainability and freedom that what will lead us to a world where the destitution of poverty is an abject recollection of a difficult past, a bad nightmare that the children of our children will read about in their schoolbooks and ask us: “How was this possible?” Hopefully, they will also recognise us as the generation that had the courage to put an end to the nightmare.